Capital Market Laboratories

Apple Pay

Written by Ophir Gottlieb and Jason Hitchings

BREAKING
News broke from Tech Crunch that while Apple Pay is available in six countries right now, Apple has its eyes set on the rest of the world. Jennifer Bailey, VP of Apple Pay, told Tech Crunch:


But that isn’t the story – this is:

BREAKING NEWS: DISRUPTION
In an aggressive and shrewd move, we have learned from Re/code that Apple will be bringing its Apple Pay to mobile e-commerce sites, and then an even larger disruption. First step one, then step two:



What does disruption mean? In both use cases, Apple has “killed the password.” At first blush it may not sound sexy, but friends, upon further review, we will see that this is $300 billion worth of sexy.

Just a month ago, Apple revealed to the world that it had an active install base of over 1 billion devices. That’s ‘b’ for billion.

THE PRIZE
The sheer size of the just 'mobile pay’ market will be explosive. Transaction volumes are projected to hit $700 billion in yearly sales by just 2020, according to a study by Statista:



But that’s the infancy. Here is Bank of America’s take:


But now Apple is also turning to the desktop with Apple Pay, and that means we now are looking at Visa (V), MasterCard (MA) and PayPal. More than half of online retail purchases still happen on desktop and laptop computers (Re/code).

APPLE’S THRONE
Here’s the mobile pay market share data we have for 2014 and 2015 just looking at phones:


All told, Apple’s iPad and iPhone control a staggering 65% of market share.

Add the payment capability to mobile e-commerce as well as the desktop and laptop e-commerce world and we’re looking at a business line that in and of itself could be worth more than $300 billion in market cap.

OTHER MEGA CAPS
Facebook, Alphabet’s Google and Amazon are all chasing the mobile pay trend. But Facebook saw mobile payments actually decline in the quarter ending Decmeber 2015, and remember, Facebook has no hardware – that’s no watches, no phones, no desktops and no laptops.

Google recently created Android Pay:


While Google certainly has Android out there for phones and tablets, we can hardly call its Chromecast a hardware to be reckoned with. This move by Apple is combative and attacks Google and its mobile pay hopes at its infancy.

Amazon’s Wallet was a failure and nobody thought much of it. But Amazon is back – behind or not, with over $70 billion in retail sales, the company will likely stop at nothing to win. But even the mighty Amazon has recognized the power of Apple’s one billion device install base.

HOW BIG OF A DEAL IS THIS?
We saw the mobile pay markets – measured in trillions of dollars soon. But let’s look at Visa, MasterCard and Paypal. The three companies have combined market caps of about $330 billion, or more than half of Apple.

Apple Pay is already exploding. Here are few recent snippets from Apple. The first is from CEO Tim Cook on the earnings call for calendar Q4 of 2015:



Yes, he said ten times higher growth in six-months.

Further, in January we learned that Apple Pay is coming to ATMs from Bank Of America and Wells Fargo (Tech Crunch).

And then there’s China. Check this out:



Together the enormity of Apple Pay through mobile with the functionality of “touch your monitor and now you’ve paid” promise of Apple Pay on desktops and laptops, we could be looking at a business line that, as of Apple’s price today, could be worth an additional 30% of Apple’s value.

SEEING THE FUTURE
There’s so much going on with Apple we can’t cover it all in one report. In order to find these gems and then the 'next Apple’ or 'next Amazon,’ we have to get ahead of the curve. This is what CML Pro does. Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution and break the information advantage the top .1% have.

Each company in our 'Top Picks’ is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:



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Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.

These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.

The author is long Apple shares. Thanks for reading, friends.

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